Since the beginning, BI has directed the ASPI as a standards agency mandated to create QRIS, using standards with high interoperability and interconnectivity.
By
RICO USTHAVIA FRANS
·6 minutes read
Bank Indonesia, the Indonesian Payment System Association (ASPI) and all payment service providers should be applauded for their success in promoting QRIS (Quick Response Code Indonesian Standard) as part of the national retail payment infrastructure. Since its launch by the central bank in August 2019, QRIS has grown rapidly.
According to the ASPI, the number of QRIS merchants as of June 2022totaled 19 million merchants that recorded 79 million monthly transactions worth Rp 9.5 trillion (US$6.12 million). The figure is quite significant compared to the monthly transaction value of Rp 46 trillion for debit cards, Rp 25 trillion for credit cards, and Rp 32 trillion for electronic money.
Since the beginning, BI has directed the ASPI as a standards agency mandated to create QRIS, using standards with high interoperability and interconnectivity. QRIS has therefore been designed so all electronic money service providers and savings banks can use QRIS installed by any merchant. This is possible because the QRIS network is connected to four national switching operators, namely Rintis, Artajasa, Jalin, and ALTO.
This is the power of QRIS pricing compared to debit card pricing.
Commercially, BI regulates the merchant discount rate (MDR), the QRIS merchant fee at 0.7 percent of the payment value. Thus, there is no reason for merchants to be choosy about which payment instruments and issuers to accept. All carry a uniform charge. This is the power of QRIS pricing compared to debit card pricing.
For debit cards, if the card issuer is the same as the provider of the electronic data capture (EDC) machine, or card swiping machine, the merchant is charged 0.15 percent.
If the debit card issuer is different from the merchant's EDC provider, it carries a higher charge of 1 percent. This has led to most merchants installing multiple EDCs from various acquirers.
QRIS is special. However, several fundamental things can be done to make QRIS even more powerful, namely by not positioning QRIS as a payment instrument, but only as a payment mechanism.
Mechanism, not instrument
QRIS is currently positioned as if it were a payment instrument, so the rules have also been prepared to align with this concept. In fact, QRIS is not actually a payment instrument like a debit card, credit card, or e-money. QRIS is also not a source of funds. QRIS is just a way of using a payment instrument, like the methods of swiping, striking, or tapping a card on an EDC in a store. The difference is, QRIS uses a camera to scan the code as a payment mechanism.
Here are some suggestions to make QRIS even more powerful. First, the QRIS pricing standard should be adjusted to the type of payment instrument. The MDR pricing of 0.7 percent is suitable for debit cards
and electronic money, but not suitable for credit cards. Credit card MDR pricing generally ranges from 1.5 to 2 percent because it involves cost of funds and credit risk that must be borne by the credit card issuer. The standard pricing of 0.7 percent is a commercial barrier for using QRIS with a credit card as a source of funds.
Apart from credit cards, there are other types of transactions, such as buy now, pay later (BNPL), which should also be able to take advantage of QRIS, of course, with the appropriate pricing scheme. If we can change the QRIS paradigm into a payment mechanism, QRIS use will expand without being constrained by inappropriate pricing policies.
For example, the limit should be lower for transactions that use the static QRIS method of scanning a QRIS sticker and entering the transaction value manually.
Second, the QRIS transaction limit should ideally be dynamic. To mitigate abuse, BI currently limits QRIS transactions to a maximum of Rp 20 million. Ideally, this limit should be adjusted to the transaction type and relevant risk. For example, the limit should be lower for transactions that use the static QRIS method of scanning a QRIS sticker and entering the transaction value manually.
However, for dynamic QRIS displayed on an EDC screen, the limit can be increased to Rp 20 million or more, because it is relatively safer. For example, fund transfers of more than Rp 20 million can be allowed. With dynamic limits but manageable risk, QRIS will better meet the needs of diverse users.
Third, the distribution of MDRs among QRIS users should provide incentives for acquirers to expand the acceptance network. For off-us transactions in which the QRIS acquirer and issuer are different parties, both parties currently receive more or less the same MDR share.
This scheme is different from the cash withdrawal scheme using ATMs. In this, most of the income is enjoyed by acquirers as owners of the ATM. QRIS acquirers incur large investment costs to acquire and maintain merchants. A larger revenue share for acquirers will provide an incentive for them to invest more in expanding their QRIS acceptance network.
Fourth, accelerate the expansion of international interconnectivity using a global principal network. Currently, the QRIS network is connected to the QR payment network in Thailand and is currently being tested with Malaysia’s QR network. If we travel to those countries, we can pay by scanning their national QR standard, just like in Indonesia. On the other hand, tourists from these countries can also use their payment instruments at QRIS merchants.
Bilateral cooperation is good because it can make more detailed and specific arrangements between the two signatory countries. However, it is a long process because it must be done one by one. If there is an opportunity for international networks, such as Visa, MasterCard, JCB, or Union Pay, to become switching service providers, this would certainly speed up the global QRIS interconnection process. Thus, debit cards, credit cards, and e-money issued in Indonesia can be used in other countries that use a local QR.
Apart from the things above, there are several banks and e-money issuers in the field that still use non-QRIS QR codes.
They do this so that merchants will prefer to use their applications and instruments as means of payment. Merchants will benefit from this because with non-QRIS QR, they pay a smaller MDR or the service can even free. However, this goes against the QRIS’ spirit of standardization, interoperability, and interconnectivity. BI should immediately control this.
QRIS is indeed an extraordinary achievement from BI, ASPI, and all payment industry players. Hopefully, QRIS can become even better.
RICO USTHAVIA FRANS,Member of the Steering Committee of the Indonesia Fintech Society (IFSOC)
(This article was translated by Hendarsyah Tarmizi)